HOUSE FINANCE COMMITTEE April 16, 1998 8:55 A.M. TAPE HFC 99 - 82, Side 1 TAPE HFC 99 - 82, Side 2 CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 8:55 a.m. PRESENT Co-Chair Mulder Co-Chair Therriault Representative Grussendorf Vice-Chair Bunde Representative Kohring Representative Austerman Representative Williams Representative G. Davis Representatives Moses, Davies and Foster were absent from the meeting. ALSO PRESENT Representative Norman Rokeberg; Anne Marie Holen, Alaska Native Health Board, Anchorage; Danny McGoldrick, Campaign for Tobacco Free Kids, Washington D.C. TESTIFIED VIA THE TELECONFERENCE NETWORK Christine McIntire, Executive Director, American Lung Association, Anchorage; Craig Harpel, Executive Director, American Heart Association, Anchorage; Angie Aceltine, Community Outreach, Soldotna; Diana Campbell, Tanana Chiefs Conference, Fairbanks; Elizabeth Ripley, Director, Community Health Planning Valley Hospital Association, Matsu; Mykki Orth, Soldotna. SUMMARY HB 37 "An Act relating to smoking education and cessation programs administered by the Department of Health and Social Services." CSHB 37 (FIN) was REPORTED out of Committee with "no recommendations" and two zero fiscal notes, one by the House Finance Committee, for Tobacco Prevention and Control, Department of Health and Social Services and one by the Department of Health and Social Services, Community Health Services. SUMMARY HOUSE BILL NO. 37 "An Act relating to smoking education and cessation programs administered by the Department of Health and Social Services." NORMAN ROKEBERG, SPONSOR spoke in support of HB 37. He observed that there are 110,000 smokers in the state of Alaska. He maintained that a large percentage of these persons wish to stop smoking. Nicotine is one of the most difficult addictions to "kick". Tobacco use is the leading cause of death in the state of Alaska. He provided members with a spreadsheet detailing the tobacco settlement's annual payments to each state (copy on file). He observed that the state of Alaska is scheduled to receive $668,9 million dollars or approximately $25 million dollars a year for 25 years. Alaska will receive an additional $8 million dollars on or before June 30, 2000 as part of the small state settlement. This is to allow small states to establish smoking control and cessation programs. Representative Rokeberg noted that HB 37 does three things. It prohibits the sale cigarettes in packages of less than 20. It also prohibits the re-importation and mislabeling of cigarettes produced for foreign markets. He observed that manufacturers are allowed to produce packages without the warning label for foreign sales. Some of these cigarettes are finding their way back into the U.S. market. It also authorizes the Department of Health and Social Services to develop and implement a fundamental smoking control and cessation program based on recommendations of the Center of Disease Control (CDC) for a comprehensive program. He observed that the CDC recommends between $8 and $17 million dollars is needed to develop a workable and effective program in Alaska. The state of Alaska currently spends $200 thousand dollars for tobacco control. He observed that smokers are paying over $40 - $50 million dollars a year in tobacco taxes. Tobacco companies have raised the price of a package of cigarettes by an additional .45 cents per package to finance their costs for the tobacco settlement. The additional tax costs Alaskans approximately $30 million dollars per year. The state receives back approximately $25 million dollars through the tobacco settlement. He concluded that Alaskan smokers pay approximately $70 million dollars annually in taxes on tobacco products. Representative Grussendorf questioned if $3 million dollars would be sufficient to begin the program. Representative Rokeberg emphasized that $3 million dollars would be a minimal approach to implementation. He pointed out that smoking cessation programs are expensive. He noted that a six-week program using a nicotine patch at the state discount would still cost $105 dollars. ANNE MARIE HOLEN, ALASKA NATIVE HEALTH BOARD, ANCHORAGE spoke in support of the legislation. She manages a small- scale tobacco control program at the Alaska Native Health Board. She spoke in support of a fully funded comprehensive tobacco control program that would build on the success of the tobacco tax and ultimately push smoking rates below the state goal of 15%. Smoking is currently estimated at 27%. It is estimated that 4,000 young Alaskans join the ranks of daily smokers every year. Once addicted, most smokers remain addicted for years before they quit, if they quit. Those who die from smoking lose an average of 12 to 15 years of life. Half of all long-term smokers die from smoking-caused disease, and half of those deaths occur in middle age. Persons who start smoking as children typically incur thousands or tens of thousands of dollars in medical bills to treat respiratory illness, heart disease, and cancer caused by smoking. Ms. Holen observed that smoking has been the leading cause of death in Alaska for some time. The state of Alaska appropriated $200 thousand dollars towards tobacco control in FY99. This was the first state appropriation toward tobacco control. The state brings in about $48 million dollars annually in tobacco taxes and will soon be seeing another $26 million dollars a year from its settlement with the tobacco industry. Ms. Holen maintained that the first priority for spending tobacco settlement dollars should be on programs to prevent and treat nicotine addiction. In a statewide public opinion survey of Alaskan voters, 86 percent said that a significant amount of the settlement money should be spent on tobacco control programs. She added that 65 percent felt that it should be a first priority. Ms. Holen observed that the Center for Disease Control has issued program and funding guidelines for each state. It recommended that Alaska spend $8.7 to $17.7 million dollars annually. That would be one-third to two-thirds of the tobacco settlement. She emphasized the importance of investing in a long-term, comprehensive program. Ms. Holen noted that the Alaska Tobacco Control Alliance has prepared a document called "The Alaska Tobacco Control Program: A Plan for the Future" (copy on file). She acknowledged that the state faces a difficult fiscal challenge. The Alliance maintains that $8.2 million dollars is the minimal amount needed for an effective, comprehensive program. Ms. Holen emphasized that the Alaska Tobacco Control Program has three main goals: to reduce initiation among youth, to help addicted youth and adults quit, and to protect non- smokers from secondhand smoke. These goals would be accomplished by the coordinated action of the seven components. It utilizes a decentralized approach that transfers most of the resources outside of state government and into communities and organizations that are fighting this battle on the front lines. She listed the seven elements that make up the program. The seven components are: ? Community Programs to Reduce Tobacco Use ? Cessation Programs ? Counter marketing ? School-based Programs ? Tobacco-Free Partnership Projects ? Enforcement * Program Development, Management, and Evaluation DANNY MCGOLDRICK, CAMPAIGN FOR TOBACCO FREE KIDS, WASHINGTON D.C. testified in support of HB 37. He stated that there are six major components for tobacco free kids: public Education, community-based programs, school-based programs, helping smokers quit, enforcement, and evaluation. He stressed that these elements work together. He discussed marketing efforts by tobacco companies. The tobacco industry spends $5 billion dollars a year or about $13 million dollars a day to market their products. He observed that 75 percent of kids surveyed had seen recent tobacco advertising. Only 31 percent of the adults surveyed had seen recent tobacco advertising. He noted that the perception by children surveyed was that more adults smoke than the actual number. He asserted that efforts by the tobacco industry to market their product must be countered. Counter marketing consists of paid print, radio, and television advertising, and public relations efforts. The public education campaign utilizes contracts with marketing experts. He stressed that public education campaigns work. The California anti-tobacco media campaign reduced sales by 232 million packs in the first two years of its campaign. He noted that a combined smoking and media campaign reduced smoking in Vermont by 35 percent. Community based programs work and are a good way to reach culturally diverse populations. Community programs such as the ASSIST Program reduced tobacco consumption by 7 percent within three years of inception. The Minnesota Heart Health Program reduced smoking by nearly 40 percent by grade 12. He emphasized that most smokers start as kids, 90 percent of smokers start before the age of 19. He emphasized the importatnce of beginning tobacco education early. Mr. McGoldrick discussed school-based programs. The Alaska Coalition has developed a plan to give competitive grants to school districts. Only districts that demonstrate that they will implement school-based programs that follow CDC guidelines are given grants. These guidelines demand that programs emplemented in schools are evidence based programs that have been proven to be effective. School based programs have been demonstrated to reduce prevalence by 20 percent by grade 12. A recent study showed that a middle school social influences program reduced teen smoking even in a tobacco- producing state. He maintained that most smokers want to quit. He added that cessation products are promising but not accessible to all. Many health professionals do not provide counseling. Adults are important role models. Reducing adult smoking has a preventative affect on children and reduces second-hand smoke. The comprehensive plan would have a quit smoking line operated by nonprofit organization. Insurance coverage for cessation would be linked to providers. There would be statewide training for health providers. He observed that long-term quit rates with no counseling are less than 5 percent. Those with counseling and medications can obtain quit rates of up to 30 percent. Mr. McGoldrick discussed enforcement. Young people are still able to buy cigarette. He noted that enforcement is a key. Compliance goes along with enforcement. The plan calls for funding to enforce existing laws. Enforcement in California and Massachusetts has dramatically reduced illegal sales. It is crucial to have evaluation programs. Evaluation shows the effectiveness in states that have implemented programs. He noted that programs in California and Massachusetts have reduced tobacco consumption by 2 to 4 times the rate of other areas of the nation. Consumption in California has declined by 38 percent. Enforcement in California and Massachusetts has dramatically reduced illegal sales to minors in those states. Several community studies have shown that active enforcement of youth access laws increase merchant compliance. A recent study in Minnesota showed that increased enforcement also reduced youth smoking. Mr. McGoldrick observed that since 1992, tobacco consumption in Massachusetts has declined by 31 percent. Tobacco consumption in Oregon declined by 11.3%, with almost half the decline (5%) attributable to a comprehensive tobacco prevention program, the rest to the excise tax that was passed to fund the program. Less than a year after the initiation of Florida's Tobacco Pilot program, current smoking was reduced by 19% among middle school students and 10% among high school students. California and Massachusetts have avoided the dramatic increases in youth smoking that has occurred in the rest of the country. Since 1993, smoking among California 8th graders has remained relatively constant while increasing as much 36 percent in the rest of the country. Smoking among Massachusetts 8th graders decrease slightly between 1993 and 1996. It increased dramatically elsewhere during this period. In the last couple of years there has been a decline in smoking of 10th - 12 graders in Massachusetts while it has increased elsewhere in the country. Mr. McGoldrick noted that other early results from the Florida Tobacco Pilot Program are very encouraging: the proportion of teens who "strongly agree" that smoking has nothing to do with whether a person is cool increased. A 15-year follow-up study in Finland showed that the reductions in tobacco use produced by a mass media intervention combined with a school and community-based education program last over time. Mean lifetime cigarette consumption was 22 percent lower among program subjects than among control subjects. The proportion of California tobacco retailers who failed compliance checks for selling tobacco products to minors declined from 52% in 1994 to 22% in 1997. Mr. McGoldrick observed that the proportion of tobacco retailers in Massachusetts who sold tobacco illegally to minors has fallen from 48% to only 8% since the inception of the program. There have also been declines in adult smoking California and Massachusetts. In Massachusetts, smoking declined by 48% from 1990 to 1996. He stressed that a reduction of smoking during pregnancy reduces medical costs. Mr. McGoldrick emphasized that there is tremendous public support for these programs. He stressed that these programs are available and work. He pointed out that the state has a funding source that would generate $25 million dollars a year. He maintained that the settlement would accomplish little in terms of improving the public health if the money is not used for tobacco control programs. Mr. McGoldrick showed the Committee advertising used to counter marketing by tobacco companies. Co-Chair Mulder asked how important is price as a determination of children smoking. Mr. McGoldrick stated that price is an important deterrent. He stated that studies have shown that the strongest impacts occur when a price increase is combined with tobacco control programs. Co-Chair Mulder noted that Alaska has the highest tobacco tax in the country. Mr. McGoldrick stated that reductions in sales are 17 percent after the first year of the tobacco tax. Co-Chair Mulder observed that reductions in sales could be misleading, since Alaska is influenced by a number of markets. Mr. McGoldrick emphasized that this is consistent with other states. Co-Chair Mulder noted that the state of Alaska has taken the first step in tobacco control by imposing the highest tax level and suggested that it would make sense to allow the tax program to work before starting another. Mr. McGoldrick reiterated that there would be a better reduction rate with the addition of other programs. He added that it is essential to counter marketing by the tobacco industry. In response to a question by Vice-Chair Bunde, Mr. McGoldrick noted that there is a 30 percent national increase of smoking among high school students. He observed that there are few national smoking prevention programs. Most states spend little on prevention and many programs are new. Statistics show that smoking prevention programs are successful. Vice-Chair Bunde that there is more product placement of tobacco products in entertainment. Mr. McGoldrick observed that our culture promotes smoking and that it needs to be countered. (Tape Change, HFC 99 - 82, Side 2) Vice-Chair Bunde stated that a national news program has suggested that the tobacco industry encourages shoplifting of their products. Mr. McGoldrick noted that tobacco industries pay retailers to place their products in prominent places. Almost 40 percent of the marketing and promotion budget of the tobacco industry are spent on slotting fees. Representative Austerman asked if there is federal funding for these programs. Mr. McGoldrick observed that 17 states receive federal ASSIST funding of less than $1 million dollars per state. The remaining states receive a nominal amount through a program called IMPACT. Representative Austerman questioned if there is a breakdown of what is spent in states like California for different aspects of the program. Mr. McGoldrick stated that there are guidelines for what needs to be spent. He observed that media is a large part of the expense. He noted that there are fixed costs that would result in a larger cost per capita in small population states. He pointed out that arguments made by small states during the settlement discussions, resulted in a supplement based on the fact that small states would have greater per capita costs to implement programs. CHRISTINE MCINTIRE, EXECUTIVE DIRECTOR, AMERICAN LUNG ASSOCIATION, ANCHORAGE testified via teleconference in support of HB 37. She noted that recent data from the state of Florida demonstrates that results from tobacco control programs can be quick and effective. She stressed that they have worked long and hard on a rational strategic plan that reduces state bureaucracy. She emphasized that money spent now on these programs can reduce future costs. The state of Alaska receives a total of $74 million dollars from the tobacco tax and the tobacco settlement per year. She maintained that half of this funding should be used to turn back the tobacco epidemic. CRAIG HARPEL, EXECUTIVE DIRECTOR, AMERICAN HEART ASSOCIATION, ANCHORAGE testified via teleconference in support of HB 37. He noted that although there are other factors to heart disease, tobacco is the number one risk factor in cardio-vascular disease. He noted that 28 percent of Alaskans smoke. He observed that 47 percent of Alaska Natives smoke. He observed that 36 percent of Alaskan teens have smoked within the last 30 days. DIANA CAMPBELL, TANANA CHIEFS CONFERENCE, FAIRBANKS testified via teleconference in support of HB 37. She maintained that 100 percent of the tobacco settlement money should be used for health programs, primarily tobacco programs. She stated that cancer deaths of Alaska Natives are the highest in the nation. She stressed that smokers want to quit. She observed that one child started smoking at age 6. She stressed that there are not enough programs available for those that want to quit. ELIZABETH RIPLEY, DIRECTOR, COMMUNITY HEALTH PLANNING VALLEY HOSPITAL ASSOCIATION, MATSU testified via teleconference in support of HB 37. She noted that the Association commissioned a health status survey in the Matsu area in 1998. She observed that 31 percent of the population smoked. The rate of emphysema correlated to the rate of smoking in the communities surveyed. There is no smoking cessation program in the Matsu Valley. The survey asked what change respondents would make to change their health in the next year. The number one change was to quit smoking. She stressed that she has seen countless patients, in great suffering, lament that they are dying from something that is so preventable. ANGIE ACELTINE, SOLDOTNA testified via teleconference in support of HB 37. She stressed that the settlement money should go to medical and education prevention. MYKKI ORTH, SOLDOTNA testified via teleconference in support of HB 37. She agreed that settlement money should go to medical and education prevention. Representative Williams MOVED to ADOPT Amendment 1 (copy on file). Representative Rokeberg explained the amendment. Amendment 1 deletes "does not comply with all of" and inserts differs in any respect from" on page 1, line 12. It also inserts "adding" on page 2, line 5 before "masking" and changes "may" to "shall" on page 2, line 10. He observed that the wording may differ and the rotating warnings would not be utilized as required by the FTC. He added that the amendment would require the commissioner to destroy the cigarette rather than resale them. There being NO OBJECTION, Amendment 1 was adopted. Vice-Chair Bunde suggested that the fiscal note be increased by $2 million dollars. Representative Grussendorf clarified that the intent would be that the additional funding come from the Department of Health and Social Services. He stated that he supported the amount but not the funding source. Co-Chair Therriault recommended that the fiscal note be zero. Vice-Chair Bunde MOVED to report CSHB 37 (FIN) out of Committee with the accompanying $3 million dollar fiscal note by the Department of Health and Social Services, dated 4/15/99. Co-Chair Therriault OBJECTED. He MOVED to DIVIDE the question. He stated that he would support a zero fiscal note. He observed that there is no funding in the majority- spending plan to support the $3 million dollar fiscal note. Co-Chair Therriault noted that the pending MOTION would be to move from Committee the $3 million dollar fiscal note by the Department of Health and Social Services dated 4/15/99. Co-Chair Mulder MOVED to AMEND the MOTION by reducing the fiscal note to zero. There being NO OBJECTION, it was so ordered. Representative Grussendorf suggested that the legislation be held for further review of the fiscal note. Co-Chair Therriault observed that their Committee's schedule was full. A roll call vote was taken on the motion to adopt a zero fiscal note for the Department of Health and Social Services, Tobacco Prevention and Control. IN FAVOR: Kohring, Austerman, Davis, Therriault, Mulder OPPOSED: Grussendorf, Williams, Bunde Representatives Foster, Moses and Davies were absent from the vote. Representative Grussendorf and Vice-Chair Bunde stated that they could not support the legislation without the accompanying funding. Co-Chair Therriault observed that funding could be added anywhere in the process if a funding source were found. Representative Grussendorf stated that he would support moving the bill from committee, but that he would try to find support for funding to implement the program. Vice-Chair Bunde OBJECTED to moving the bill. He emphasized that it is a hollow gesture. Representative Rokeberg stated that he preferred that the legislation move from committee. A roll call vote was taken on the motion to move CSHB 37 (FIN) from Committee. IN FAVOR: Kohring, Austerman, Davis, Therriault, Mulder OPPOSED: Grussendorf, Williams, Bunde Representatives Foster, Moses and Davies were absent from the vote. The MOTION PASSED (5-4). CSHB 37 (FIN) was REPORTED out of Committee with "no recommendations" and two zero fiscal notes, one by the House Finance Committee, for Tobacco Prevention and Control, Department of Health and Social Services and one by the Department of Health and Social Services, Community Health Services. ADJOURNMENT The meeting adjourned at 10:10 a.m. House Finance Committee 11 4/16/99